We already know that real households do not live within their means; if they did, the economy would grind to a halt. Modern prosperity is built upon debt, and the main aim of economic recovery is to get the banks lending again to both households and businesses.

It is a myth, and it is propping up austerity politics. Another myth is that there is a shortage of money. This implies that there is a fixed pool of money, or some other external factor limiting supply. …

The austerity myth that damaged the public sector most significantly was the claim that states could not create money, they could only borrow from the banking sector.  …

Austerity reflects an ideology that sees the public sector as a drain upon the activities of the private sector. And that is the biggest myth of all. It is the public capacity to create and circulate public wealth, and guarantee a public currency, that sustains commerce. We need an economic policy that understands that.

‘Handbag economics’ and the other myths that drive austerity
http://www.independent.co.uk/voices/handbag-economics-and-the-other-myths-that-drive-austerity-a6954851.html